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    GM Vice Chairman Says PSA Stake Is Part Of Fixing Opel


    William Maley

    Editor/Reporter- CheersandGears.com

    March 7, 2012

    Last week, General Motors and PSA announced a new alliance that would have the two sharing components and give stronger purchasing power for both. The deal is "an additional tool to the toolkit in Europe" said GM Vice Chairman Stephen Girsky to reporters. When asked what would come next in GM's plan to save Opel, Girsky declined.

    "We can't tell you what our play is in Europe. We will tell you when it plays out over the next period of months and years ... I don't see the play in Europe showing up in one big bang."

    This has everyone worried about what the next move will be for Opel. Currently, European production capacity is estimated to be 20% higher than needed to keep companies profitable in a weakening market.

    "Excess capacity is not a GM issue, it's an industry issue," Girsky argued.

    Also, GM is keeping quiet on whether it will post a thirteen year of losses in the European market. This comes on the heels of Ford announcing a $500 to $600 million dollar loss in Europe this year due to an 8.5% drop in European auto sales.

    "It's not just investors who hate uncertainty. It's the workers, it's the employees. People are working really hard on this," Girsky said.

    However, analysts aren't liking the silent treatment from GM. Michelle Krebs, analyst with Edmunds.com told Reuters that GM was taking risk with investors and consumers by saying they have a plan and not reveal any specifics. Also, the PSA deal doesn't solve the whole excess capacity problem.

    "It's not solving their problem, which is stemming the losses, and they are basically asking us to trust that the payoff will come in the future," said Krebs.

    Source: Reuters

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    Throwing good money after bad?

    And is this the altar they plan to sacrifice Holden on?

    I'm less than enthusiastic about this "plan".

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    Perhaps it is convenient that high corporate tax jusrisdictions (like most of Western Europe is) do not show profits at all or show very moderate ones? My point being that without knowing exactly how GM allocates expenses/revenues between segments (i.e. without a look at GM's Transfer Pricing file) saying this or that about GME is basically useless...

    The partnership is clever in the sense of creating Purchasing synergies; eventually some product development ones down the road.

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    "GM was taking risk with investors and consumers by saying they have a plan and not reveal any specifics. Also, the PSA deal doesn't solve the whole excess capacity problem.

    "It's not solving their problem, which is stemming the losses, and they are basically asking us to trust that the payoff will come in the future," said Krebs."

    Okay, I'm a part time automotive journalist hack and even I can see what GM is doing here.

    1. Citroen/Peugeot needs economies of scale and platforms.

    2. Citroen/Peugeot needs to fill excess manufacturing capacity.

    3. Opel needs to get away from the German workers union.

    Anyone want to take a stab at step 4?

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    I agree on the risk as they are holding up the dividens for this year. But I see this as a step back to get head.

    I see this as more like the Renualt Nissan venture vs the GM Fiat fiasco.

    As for Holden they are the down under Chevy and the RWD cars can and will be built anywhere. For the most the Alpha will show that GM did what Holden could not do with the Zeta in several attempts and make it lighter.

    Holden for the most is just a name and their engineering can be done elsewhere just as well as they did there. In fact many of those there will just end up where ever the RWD plaform is done. With a global GM that could be anywhere.

    Fact is the Aussies are not the only people at GM who can design a RWD.

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    Hyper: You know that I strongly disagree with you on all of what you say about Holden, so I'll just leave it at that.

    As for Opel, and GME in general, it remains the rotten tooth in GM's mouth and I wonder if efforts to save it are a complete waste of time and money - lots of money.

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    Hyper: You know that I strongly disagree with you on all of what you say about Holden, so I'll just leave it at that.

    As for Opel, and GME in general, it remains the rotten tooth in GM's mouth and I wonder if efforts to save it are a complete waste of time and money - lots of money.

    There is nothing wrong in disagreeing appropriately. It is healthy to do so.

    I would not want you to agree all the time or you would never have a point to make that I already would have myself. Camino you help me form better opinions when you disagree. You either change mine opinion or you make me stock up and better support my opinion. I am ok with anything you say as we may not always agree but I respect what you say. :thumbsup: I hope you by now already know that.

    Edited by hyperv6
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    I believe there is room for both brands in GM's stable. Holden is the easier fix so GM needs to concentrate on the big bleeder right now that is Opel. Yes the industry is vastly over capacity in the EU right now, but so was the industry in North America in 2007. It got right-sized and appears to be humming along rather nicely.

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    Hyper: You know that I strongly disagree with you on all of what you say about Holden, so I'll just leave it at that.

    As for Opel, and GME in general, it remains the rotten tooth in GM's mouth and I wonder if efforts to save it are a complete waste of time and money - lots of money.

    There is nothing wrong in disagreeing appropriately. It is healthy to do so.

    I would not want you to agree all the time or you would never have a point to make that I already would have myself. Camino you help me form better opinions when you disagree. You either change mine opinion or you make me stock up and better support my opinion. I am ok with anything you say as we may not always agree but I respect what you say. :thumbsup: I hope you by now already know that.

    No worries, I just wanted to shunt the Holden issue aside a bit since we've been over that ground before.

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    I believe there is room for both brands in GM's stable. Holden is the easier fix so GM needs to concentrate on the big bleeder right now that is Opel. Yes the industry is vastly over capacity in the EU right now, but so was the industry in North America in 2007. It got right-sized and appears to be humming along rather nicely.

    I just question the wisdom of focusing on Europe (right now, at least).

    Seems a rough gamble to me.

    BTW: Holden is still makes a profit as it is...

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    I believe there is room for both brands in GM's stable. Holden is the easier fix so GM needs to concentrate on the big bleeder right now that is Opel. Yes the industry is vastly over capacity in the EU right now, but so was the industry in North America in 2007. It got right-sized and appears to be humming along rather nicely.

    I totally agree with you, yet I think the bigger issue is you have a socialist group of counteries that make it 100 times harder to let people go and close down and get rid of excess. This tends to make it very hard to lean out when you have over capacity.

    Europe is going to have to take some hard pains in loss of debt owed, jobs and life style expectations just as have millions in the US.

    I have nothing against making money based on hard work, but some of our CEO's like the one at Occidental Oil who had the board pay him 372 million over the last 3 years for sub par performance and being the worst performing but still profitable oil company is just ripping off the stock holders. This is one extreme going in one direction and then you have the socialist Unions of Europe who feel companies HAVE TO provide jobs to everyone and never end.

    We need enough oversight to balance out and keep companies profitable and competative yet balanced for everyone.

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    The real issue is Europe as a whole is in a bigger mess than Opel is and Opel is not good either.

    The Socialist, the enviromental geen people and the economy are mess. Now with the issues in Iran you have a growing issue of oil becoming tighter and more expensive with a threat of Nukes pointed at Europe. We won't even get into the Holy war that has been on and off in areas of Europe that even the Russians can contain.

    But Europe has aways had it's ups and downs in history and they are still there in spite of themselves. In the past they always could flee to the States, Africa, Austrailia and South America. The real issue is when many flee where will they go this time?

    GM is to the point where they have a hand full of issues here but they can't let go either. They are trying to work out a plan to keep the ship afloat and not lose the money they would if they just shut down. Like I have said before they are getting more and more to the point where they can build cars anywhere and make more money importing.

    Edited by hyperv6
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